PROCUREMENT REFORMS
IN HEALTH SECTOR


Preamble


Health Care sector in India consists of public & private facilities. Private, sector by and large are concentrated in the urban areas. Public sector is spread all over, in the urban as well as in the rural areas. Backbone of rural health care is the Primary Health Centers (PHCs) and Community Health Centers (CHCs). These function under the health care machinery of the state governments, and under the technical control of District Hospitals. In India, there are 22,842 PHCs, 3043 CHCs, and over 1000 District Hospitals. Each PHC is intended to provide primary health care to a population of 20,000 to 30,000. In this task the PHCs are aided by Sub-Centers which cater to a population of about 5,000, and are the first contact point between a patient & the health care system. India has 137,311 such Sub Centers. Ratio of population to a Sub Center, PHC or CHC have all been overtaken by population growth, and as it stands today the services at these health care facilities fall short of the target, or indicators of success.
Population pressure not only have direct but many indirect effects as well. Rapid growth of industries in the urban belt causes migration from rural to urban areas. Regular migration is a well known fact of today. The main causes are lack of job opportunity, insecurity, and lack of infrastructure in the rural areas. The deficit between job-seekers and availability of opportunities is wide forcing people to migrate in search of means of livelihood. The effect is disastrous. The migrant population perceives the urban society something to exploit till they get assimilated in the urban milieu. This cycle keeps on going and will only stop once the shortcomings of the rural sector gets corrected, either by urban benefits extending to the rural areas or by rural stabilization. That will take a long time to materialise.

Health sector is no exception. It also suffers from instability in the rural & urban societies. Private health sector boasts of quality medical service, but is limited to the urban areas. Since it is profit driven it is never likely to be of value to the rural masses. National Health Policy aimed to achieve ‘Health for all by 2000 AD’ was declared in the year 1983 (1). The same slogan has been repeated in a recent announcement by the Vice Chairman Planning Commission aiming to achieve the same aim by the year 2020 (2). The only difference is the time interval of two decades. There is no road map as to how this is going to be achieved. With budgetary support ranging between 3-5% in different Five Year Plans and 3-9 % expenditure on health in different States for the last many decades how this is going to be accomplished is difficult to envision. The investment in health care sector has in fact declined from 1.3 % to 0.97 % of GDP (in 1999) (3). 13 to 15 % of Indians do not have access to health care facility. Rural health infrastructure will have to be strengthened, which at present remains in a very poor state. The situation is further complicated by health being a State Subject. The functions of the Central Govt are set out in accordance with the Article 246 of the Constitution, under Union List & Concurrent list. Regulation and development of medical, pharmaceutical, dental, and nursing professions fall under the Central jurisdiction, so does the Control of Drugs and Poison within the Concurrent list. Prevention of extension of communicable diseases from one unit to another also falls under the Concurrent list (4). Rest of the functions relating to health care comes under the State function. Therefore parameters, results, inputs, and indicators differ from sate to state and at times vary widely. Realistic and enforceable policies are required to upgrade health care facilities.

Procurement

Procurement in any health care facility is capital intensive. 40 to 60 % of the outlay in any health care institution goes for equipment. And upgrades are frequently required as electro- medical equipments improve or modify rapidly & frequently. To suit the requirement frequent addition/alteration are required in the civil work. The support for the civil work not being under the control of hospital authorities more often than not it takes time and a lot of effort for the hospital staff to get the required changes done. This all reflects on the quality of patient care and their disposal. Procurements in the health care sector are related to: -

1. Works
2. Goods
3. Services

Works

Works include civil work, construction of hospital-its designing & maintenance. Rapid and frequent modifications are required to meet the requirements of changing pattern of equipments and ancillaries. As far as the public care health facilities are concerned professional approach to construction of hospitals is lacking. There is normally a resistance to include hospital planning experts in the group. The result is that at any health care facility present a dismal look, hardly cheerful environs for the patients.

Color code, the flooring, and many other aspects of hospital construction require special attention. The floor of a health care facility should be smooth so as to minimize the chances of harboring microbes. Similarly wooden furnitures accumulate dirt and microorganism, hence should not be allowed in the patient care area. Look of a health care facility needs to be aesthetically designed to appear pleasing and patient friendly. Designing of a health care facility also has to take into consideration the type of the health care facility. If it is a sanatorium it has to be suitably designed so as to provide wide areas of garden etc, and recreational facility. If a psychiatric hospital is being planned it has to have facilities for occupational therapy. Rehabilitation centers have to be planned keeping the requirement of rehabilitation in mind. If it is artificial limb center it has to have parallel bar walking areas etc, and facilities for different physiotherapy exercises. Well designed hospital with natural light and air circulation is important for patient recovery. Expertise available in the public sector is inadequate. Expenditure on designing and construction of a hospital is thus remain not cost-effective. At best it is just 40 – 50 %. It is better to invest 110% and achieve 80-90% cost-effectiveness than to invest 100% and achieve only 40-60% of cost- effectiveness. Cost-effectiveness has to be measured it terms of achievement of desired or intended parameters.

Design of PHC & CHC should be standardized, and be on a modular concept. Though the manpower of each PHC & CHC is standardized the building design, the services and the maintenance agencies are not standardized. Similarly district level hospitals should also be on a standard pattern so as to ensure, or at least try to ensure standard patient care.

Even for day today maintenance there is no dedicated task force available, and maintenance task in a hospital is just one of the tasks of the public works services. Under the circumstances it becomes difficult to attain speedy repair or maintenance. More so in case of electro-medical equipments which requires specialized handling, maintenance & repair.

Goods

Procurement of goods in a health care establishment may be viewed in two groups. These are drugs and pharmaceuticals, and equipments. There are stringent rules and procedures, and standards laid down for drugs and pharmaceuticals. The same cannot be said about the equipments. The regulatory authority regarding drugs and pharmaceuticals is the Drug Controller of India, but his functions are limited to certifying new drugs, regulating import of new drugs, and laying down pharmaceutical procedures. The procedures are laid down in the DGS&D manual. Procurement policies are elaborate, and in detail. Under the Drug & Cosmetic Act 1940(as amended) the regulation of manufacture, sale & distribution of drugs is primarily the concern of the State authorities while the Central authorities are responsible for approval of new drugs, laying down the standards for the drugs, and coordination with a view to bring about uniformity in enforcement of the Act (5).

Central Drugs Laboratory, Calcutta (established under this Act) is the national statutory laboratory of the Govt of India for quality control of imported drugs & cosmetics. Its functions include active collaboration with the WHO in preparation of International Standards & specifications for International Pharmacopoeia. Central Indian Pharmacopoeia Laboratory is also a statutory body for quality control of drugs and cosmetics (including contraceptives), and is an appellate authority in disputes relating to the quality of condoms (5).

Thus it is obvious that there are elaborate rules/policies regarding drugs in India. Implementation very much depends upon on the State authorities. It
is a common knowledge that manufacturers of spurious drugs are thriving because of indifferent attitude of the controlling agencies, but hardly any effective measure is enforced. Those who get caught wriggle out by unfair means and indulge in the malpractice all over again. This exemplifies the loose control exercised by the regulatory authorities.


As far as the equipments are concerned there are no regulations, policies or standards to cover all equipments and intruments. This makes things difficult. One has to rely on declared parameters of the manufacturers, which in principle appear comprehensive but may differ in standards. The differences may be very wide and may be difficult to comprehend at the initial stage till one faces difficulties during maintenance. So far sophisticated electro-medical equipments are concerned this may not be a problem area as the standards may be verifiable and known. But as far as the other equipments are concerned it may be an area of acute problem, especially in the procurement of bio-medical waste treatment equipments. There are no laid down standards for incinerator, hydroclave, or shredder. This aspect being recent to India poses great difficulties in absence of standards. The acquisition therefore will remain totally dependant on the collective or individual wisdom, or knowledge about these technologies and its application which will bear upon acquisition of these equipments. And knowledge, as well as its application being poor in India it would be a matter of chance, or luck if one hits upon acquiring appropriate technology or the make for appropriate application. It must be appreciated that improper, or no waste disposal is the root cause for most of environmental and social degradation.

Even for proven equipment maintenance is so poor that at any given time about 40 % of these equipments remain unserviceable for want of proper maintenance (6).

Process of acquisition of (medicine or equipment) follows principle of L-1 as per laid down rules or the guidelines. That means once the QRs are laid down the lowest bidder has to be given the supply order. Therefore it is absolutely essential that the QRs are laid down with utmost care so that unreliable suppliers are excluded. Nevertheless at times procurement lacks quality due the insistence to follow the principle of L-1. Medicines are indented by generic names. There are umpteen numbers of firms producing the same medicine with the same formula, and some of these may have sprouted only a few days ago. These firms have the advantage of quoting a lower price because of low infrastructural investment but neither have the same dependability nor assured quality. Therefore at least in procurement of medicines one has to review the principle of L-1, its validity for universal application viewed in the context of reliability. In fact bar coding may be one of the measures which can be adopted to ensure quality.

Services

Health care establishments are complex entities encompassing general administration to health care administration, canalizing technical know how, establishing and maintaining rapport with the public at large, and the society it serves, and presenting a patient friendly ambience and atmosphere. It is difficult task to achieve.

Services in a health care establishment are technical, & non-technical. Technical services have to be necessarily provided by the health care professionals – doctors, nurses, paramedics, and staff trained in patient care (preventive, promotive, and rehabilitative aspects of health care), the non-technical services may be managed by others. Health care establishments in the public sector find themselves seized with the problem of looking after the non-professional services also. This cuts on the available time to look after the patients and related professional work thus affecting the quality of patient care. Services like cleanliness, laundry, patient food, security etc can always be outsourced. And in the present day scenario even the IT functions of the facility (without compromising confidentiality) can be outsourced. Outsourcing is the ‘in thing’ as far as the private health care facilities are concerned. The same cannot be said about the public sector facilities.



The Problem

It can thus be seen that there are problem areas which need to be corrected if health for all is to be achieved. What is done must have State machinery as the focus since health is a State subject. Some measures are described in the subsequent paragraphs.

Suggested Solution

Constitutional/Statutory/Regulatory

Health is all pervasive and healthy body & mind is an asset to any society. At the same time measures are also required to prevent misuse of drugs by bringing in better uniformity at the state level health care delivery system. Any measure which falls short of achieving this aim may be termed as a deficiency or shortfall. Second rate health of people will give rise to only second rate intellectuals. Therefore the health standards and quality of health care should be of paramount concern in any society. With the growth in population malpractices have set in, and therefore there is an urgent need to provide stringent and effective measures. With the population growth the waste generation has also grown exponentially, the natural barrier has reduced (thus spread of infection with greater ease); load on the urban health care facilities has increased substantially, bringing in malpractices in many forms. The quackery has gone up in absence of strict controls. As per the WHO 45 to 50 % of all injections given in the developing world are either unsafe or unnecessary (7). This is a potent source of spread of infection, resulting in higher morbidity demanding increased facility. It would thus be seen that ultimately it is the resources of the society which gets depleted. Definition of positive health, as per the WHO, talks only of absence of diseases & infirmity. Whereas today, our body has been polluted by chemicals, which may not manifest clinically; but have adverse effect on the physiology of human body, or on the behavior pattern. Chemical pollutants in the body affects health and behavior pattern of individuals. It is an area of research to determine these adverse effects. Therefore the definition of ‘positive health’ must change to include absence of pollutants in the body and aim should be to achieve ‘Total Health’. The apt definition therefore would be “A state of complete physical, mental and social well being, where life thrives in healthy environment devoid of pollutants; and absence of disease and infirmity.” Proper disposal of bio-medical waste is the core issue in the health sector which is still to be recognized with importance it deserves. Hospital Acquired Infection (HAI) is a matter of great concern to all health care planners. A study in UK (and since expenditure in patient care in UK is all funded by the public sector there cannot be any other better indicator) indicates clearly that over expenditure on account of treating HAI costs the state exchequer an additional amount of about one billion pounds per year. In terms of man-days lost, it amounted to an estimated 8.7 million days (9). Therefore establishing a ‘Waste Management Authority of India (WMAI)’ will not be a bad idea (10). Manifest illness, sub-clinical affliction, infection control, environmental health, pollution, and waste management, all have to be viewed together. Only then one can aspire to achieve a healthy society with improved health care.

There is therefore a necessity of reviewing the statutory rules in order to improve its applicability, and effectiveness. The present rules do not provide intervention by the Central authorities at will. The State machineries vary widely in controls and inspection standards. Federal laws, therefore appear to be the answer. The argument that it will be against the basic principles of democratic pattern of the country is baseless. The US has over riding federal laws and is a successful democracy. For example law and order is a State subject. This includes protection against infiltration. What havoc this has caused in the country, especially in Border States, is for all to see. There are many other examples which can be quoted, but the intention is to limit the argument relevant to the issue.

Health being a State subject, it is not possible for the Central authorities to intervene effectively. Sale and distribution of spurious drugs, fluids, and blood is everyday news. The State machineries, for some reason have not proved effective. The standards of enforcement differ from State to State depending on the political will, vote-bank equation, level of awareness, economical health, and organizational support or protection. A large number of diseases spread by unsafe injections, blood transfusion, use of narcotics leading to sharing of syringes etc. At most of the time the Central authorities remain a mute witness despite the resolve and capacity to intervene. Spread of infection respect no boundaries. Hence it is necessary to establish federal authority for periodic monitoring (apart from the routine monitoring of the State apparatus). The federal agency must be empowered to issue directives overriding the State’s directive in case it is at a conflict. The whole question on this issue is already under consideration of a high powered committee headed by the chairman of CSIR.

Works Related

Construction of the PHCs & CHCs must be entrusted to experts in the field by outsourcing. The existing infrastructure should also be modified as per the modern standards through experts groups in hospital construction. A standard design concept should be introduced with the concept of modular system for all the States. Designing the buildings with ancillary support is a specialized job. Maintenance of the building, electrical fittings, and many other support services relating to the structure of a health care facility can be easily outsourced to achieve better results, and to save on the effort of the professionals which will ultimately reflect positively on the health care. Presently maintenance of general medical equipment at peripheral hospitals & at the CHC etc is at the mercy of state workers who are ill-trained and not dedicated. Of late a welcome trend has set in for sophisticated medical equipments, i.e. Annual Maintenance Contract (AMC). This in a way is outsourcing. The same concept is required to extend to all levels of health care. Therefore there is a case for considering dedicated and specifically trained task force for maintenance of health care facilities, which can be specific to a large hospital or health care facility or cater to a typical group.

Procurement related

Rules regarding procurement of drugs are well laid out. The necessity is to implement the provisions in letter and spirit. Giving more teeth to the Central authorities will make the desired difference. But there are no laid down standards relating to acquisition of equipments. There is a requirement to create an appropriate authority for this purpose to function under the Drug Controller, Govt of India. Procurement is by and large market driven, and trade pressure at times is quite obvious.

To safeguard the interest of the state & the organization a Standard Purchase Committee should be established at each district level which should cater to the purchases of medicines & equipment of the CHC & PHC of that district, and health care facilities up to district hospital level. Larger hospitals and teaching hospitals may have their own Standard Purchase Committees. Duration of members should be fixed with provision of rotation to minimize corruption.

There is a requirement to create instruments to ensure quality assurance, uniformity and maintenance standards.

Summary of Recommendations

• Review of statutory bodies, its powers, and regulatory mechanism/methodology at the Central & State level
• Create a Waste Management Authority to deal with waste management in a comprehensive & effective manner.
• Greater control over the State authorities to ensure uniformity.
• Create Federal structure for better control & implementation
• Introduce standard design and modular concept for the hospitals, CHCs & PHCs, and other health care establishments, as far as possible.
• Provision of dedicated engineering task group for maintenance of hospital building, infrastructure, electric fittings, and ancillary services; or to provide technical guidance & control in case these services have been outsourced.
• Standardization of equipments of all types
• Outsourcing all the non-technical services
• Stricter vigilance & implementation
• Effective management of bio-medical waste
• In order to ensure quality acquisition the concept of L 1 needs to be reviewed
• Formation of standard purchase committee with provision of changes of members on a rotational basis
• Greater care while laying down QRs for acquisition so as to eliminate poor quality manufacturers
• Provide regular review of the provisions and regulations in order to improve/modify
• Bar-coding of medicines to indicate quality

Conclusion


Health care in India has many shortcomings. It needs a general revamping. Specific weaknesses have to be identified, and strengthened. Unless weaknesses are identified it is not possible to strengthen. Resolve to implement has to improve. There are weaknesses in the statutory provisions, regulatory rules, and control mechanisms. These need to be studied and corrected. Dr Mashelkar Committee is considering the issue, and it is hoped that it comes up with recommendations in the national interest; and in the interest of health care. The bottom line of course is clean, transparent, and corruption free dealings and acquisitions.





New Delhi
May 14, 2003 (LK Verma)

References

1. National Health Policy Document
2. ‘Vision 2020’ released by Shri KC Pant, Vice Chairperson Planning Commission – Times of India, Jan 24, 2003

3. National Health Report-1997

4. Park’s textbook of Preventive & Social Medicine, 15th edition, page 601

5. Indian Pharmacopoeia, 1994

6. Paper presented during ‘QUEST – 2001’ Conference – Lt Col RK Chaturvedi, Associate Professor, Department of HA, AFMC

7. Hospital Waste in Latin America – J Monreal (1991), WHO/PEP/RVD/94.1

9. ‘The Socio-economic Burden of Hospital Acquired Infection’ – Rosalind Plowman et al, Apr 1994 to May 1995

10. Article ‘Needed: a National Waste Management Authority’ –Verma LK, Pharmabiz Hospital Review, Nov 16 – 30, 2002

Healthcare in India: The Road Ahead

During the past decade there has been tremendous advancement in the health care scenario in India. Mainly spurred by economic growth private health care facilities have sprouted in all urban localities. The public sector spending still remains a dismal .9 % of GDP. With insurance scheme recently on the anvil it may go up marginally by introducing 1% cess on Income Tax for health care which primarily will be used for health insurance. How far will this succeed in removing health inequality in the country will remain debatable. Because health inequality is not only governed by economic consideration but many other factors, such as low level of awareness, poor connectivity, economic and gender bias etc. 15 % of Indian population do not have access to health care due to various reasons. Rural health care facilities are almost non-existent.

As per World Bank, India has a vast network of rural health care infrastructure but acutely deficient of trained manpower, and other facilities which would make such infrastructure capable. In other words there is a wide gap in capacity & capability. India has about 137,000 Sub-centres, 23,000 Primary Health Centres (PHCs), about 3,000 Community Health Centres (CHCs), and about 12,000 secondary and tertiary hospitals. Public Sector manpower includes about 29,000 doctors, 18,000 nurse midwives, 134,000 auxiliary nurse midwifes (ANMs), and about 60,000 paramedical staff (Min of Health & Family Welfare 2000). Thus availability of doctors is just about 1 per thousand, that of nurses is still lower at 0.9 per thousand, and for midwives the figure is just 0.2 per thousand. Total beds in India are about 0.7 per thousand (a total of about 8 Lakhs beds) whereas as per the WHO standards it is supposed to be at least 5 per thousand (about 40 Lakhs beds).

So, in the future substantial addition is likely to take place in hospital beds. Assuming that hospital beds in a decade would be 4 per thousand that would amount to more than four fold increase in the bed strength in the country. Only on account of hospital beds it would amount to an investment opportunity of more than INR 24,000 Crores (assuming each bed would cost about INR 10 Lakhs which would include other technical & non-technical infrastructure and equipment; and work services) in a decade. In fact this estimate is going to go up with awareness regarding waste management having taken roots in the health care sector by about additional INR 10, 000 per bed. Apart from this if the rural health care infrastructure is to be improved it would require heavy investment to improve infrastructure in the villages, such as basic amenities and connectivity. Most importantly the public health care is on the decline. Void is being filled up in the urban areas but there is no agency to fill the gap in the rural areas. Private health care facilities are not likely to invest in villages since these are profit oriented. Insurance scheme is being thought about but whether it will help the situation is debatable. Such schemes are likely to fail since it does not take two things in account. One is that insurance by itself is not going to cure a patient. He/she will have to be brought to a tertiary care hospital which does not exist at many places near a rural area. And even if there is one, connectivity being poor time taken would be more than acceptable. Moreover ethos and practices in the India are such that one patient is usually accompanied by one or two relatives. Insurance will not cover their expenditure. Taking all these in consideration it is doubtful whether insurance will be helpful to the rural population. Thus benefit of insurance would be limited to urban population, by and large. And one should not forget that more that 70 % of population live in villages in India. Need is to improve infrastructure at the villages- improve technical capability of the PHCs, improve awareness amongst the village population, institute better hygienic practices, improve availability of potable water, improve connectivity (in time frame), and create facilities which would at least not distract medical professionals from getting posted to rural areas. No doubt, these measures would require heavy investment; but an investment which is likely to give cost-effective and durable results.

Indian economy is on the move. Spending power amongst middle class has been growing continuously. We have had 7 % growth successively for the fourth fiscal year. With economic growth there is changed aspiration and expectation. Healths being primary to healthy growth of a society, hospitals are bound to mushroom. Already we are having many chains of hospitals in the country. These are all in the private sector and in urban areas, but with passage of time such chains and state of the art hospitals are likely to come up even in the rural areas. With growth in the health sector there will be demands for manufacture & supply of equipment, construction of hospitals, training of medical staff, and continued awareness programmes all through the year.

As per the National Health Policy 2002 aggregate annual health expenditure is about INR 80, 000 Crores. R & D in health sector is just about 1150 Crores. Goals set to be achieved by year 2010 is to increase the allocation in health sector (centre) to 2 % of GDP, and to increase state sector spending from present 5.5 % to 7 %. Thus we have to look at investment opportunity to the extent of at least INR 80,000 to 100, 000 Crores every year up to year 2010. If the proportion of doctors, nurses, and paramedics is to be improved (which will have to be improved to cater for increasing hospital beds) then many more educational institutions will have to be created and run. One can very well imagine what it would mean. It will mean tremendous addition in the infrastructure which would require all sorts of consumables & durables required to establish and run a training establishment. All these will be a challenge and opportunity for Indian Companies to come forward and deliver.

For example if only the future requirement of equipment for health care waste management is taken into consideration the scenario would be some what as follows: -
• Assuming there will be a four fold increase in hospital beds
• Assuming that waste management plans are as per the rules
At the rate of about INR 10, 000 per bed estimate it would be about INR 800 to 1000 Crores as per present projections & requirements; and about INR 3200 to 4000 Crores in the next 5 years. Therefore there is no doubt that health care sector is going to have a major change and allocation of resources from the public as well as private sector is going to go up many times.

Much of medical and dental equipment are imported at present. Thus investment cannot be said to be cost-effective as much as it could be. Therefore there is an acute need for indigenization of manufacture of equipment and medicines in the country, which has tremendous scope. Of course, research & development in manufacture of equipment & also in medicines will have to go hand in hand only then one can expect a substantial change in the present scenario. Present scene of research is rather dismal in terms of allocation of financial resources, trained manpower, and unfortunately the mind set where every researcher tries to emulate the WEST. No doubt scientific advancement which has taken place in the developed countries must be taken advantage of but application must be tuned to conditions, infrastructure, and practices & beliefs as per local conditions. This is truer in areas of applied research. In certain cases research & development will have to be in areas which can be directed as per need. More research will have to be undertaken in areas, such as environmental health, system application research for hospitals and medical institutions, applied research for rural health care etc, where capacity will have to be translated to capability. Only then advancement will be beneficial to public at large without discrimination and division of resources. If India has to gain advantage (in health care sector) of present economic boom applied research will have to be dominant area of research. All these would not only be a challenge but tremendous opportunity to the business sector in the country.

Health tourism is a recent development in India. Patients from other countries are attracted due to good quality of medical care and low cost in comparison to developed countries. Long waiting period in countries like the UK is another reason. It is easily an industry of about 1000 Crores per year. As per statistics published in Asia Times Jul 19, 2003 “hospital services, health care equipment, managed care and pharmaceuticals are poised to grow by 13 percent annually for the next six years. India's health care industry could grow exponentially, as have software and pharmaceuticals over the past decade. The government believes that only 10 percent of the market potential has been tapped. With global revenues an estimated $2.8 trillion, health care is the world's largest industry”

All in all it would be apparent that health care sector has large potential for growth and offers challenges & opportunities together.

To the question should Indian industries aspire to take a lead in the health care sector the answer is an emphatic ‘YES’. It is technically, administratively as well as financially feasible and is capable.


Lalji K Verma

New Delhi November 29, 2005